Risk Return, and Managerial Objectives: Some Evidence From the Savings and Loan Industry

Verbrugge, James A.; Goldstein, Steven

doi:10.1111/j.1475-6803.1981.tb00289.x

Cited by 49 publications

(23 citation statements)

References 29 publications

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“…Our results differ slightly from those of Verbrugge and Goldstein (1981) who found that profits in mutuals were consistently lower than in stocks. Since our sample of federally chartered institutions includes both savings and loans and savings banks while our sample of state chartered institutions includes only savings and loans, it is possible that there is an uncontrolled factor operating here.…”

Section: Overall Economic Efficiency; Expected Profitcontrasting

confidence: 57%

“…Verbrugge and Goldstein (1981) performed an analysis of the savings and loan industry to test for the existence of management expense preference behavior and for differences in risk preference. Their results indicate that mutuals are more risk averse than stockholder-owned savings and loans.…”

Section: Property Rights and The Objectives Of The Savings Institutionsmentioning

confidence: 99%

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An examination of the relative economic efficiency of mutual vs. stock savings institutions

Stansell

Hollas

1990

J Real Estate Finan Econ

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This article employs a nonlinear system of Cobb-Douglas profit and input demand equations to analyze price and technical efficiency in a sample of presumably not-for-profit mutual and presumably profit-maximizing stock savings institutions. Theories of property rights and agency are reviewed to provide predictions of price efficiency (i.e., profit maximization and cost minimization behavior), and technical efficiency. The study makes several contributions to the literature. First, it examines the effect of ownership form on both price and technical efficiency. Second, it separately examines the effect of regulatory form on both price and technical efficiency. The model enables us to analyze the separate effects of ownership and regulatory form across a heterogeneous sample of firms. We also analyze the effects of risk in the form of two separate regulatory variables and the effect of market share on economic efficiency.Financial intermediaries have been the subject of numerous studies that examine various aspects of economic efficiency. The effect of ownership form on economic efficiency has not been widely examined. Private ownership has usually been equated with the profit maximization objective. Relatively little research has been performed on privately owned not-for-profit firms (such as mutuals). Theory would suggest that efficient mutuals would engage in cost minimization behavior, but not profit maximization behavior. Nichols (1967) performed a seminal study of the savings and loan industry, noting that mutuals may engage in behavior that is inconsistent with either cost minimization or profit maximization objectives.The objective of this study is to examine the economic efficiency of savings institutions, both stock and mutual, using a system of Cobb-Douglas profit and input demand functions. Mullineaux (1978) first employed a simplified version of a profit function in the study of the commercial banking industry. More recently, Hancock (1985) used a system of translog profit and input demand functions in a study of commercial banks.

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Section: Overall Economic Efficiency; Expected Profitcontrasting

confidence: 57%

Section: Property Rights and The Objectives Of The Savings Institutionsmentioning

confidence: 99%

An examination of the relative economic efficiency of mutual vs. stock savings institutions

Stansell

Hollas

1990

J Real Estate Finan Econ

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“…These papers, in general, have suggested that managers might pursue the strategy of maximization of personal utility by favoring excessive allocation of resources in salaries, a larger staff, unnecessary perks, privileges, and office settings. Among others, Edwards (1977), Hannan (1979), Hannan and Mavinga (1980), Verbrugge and Goldstein (1981), Verbrugge and Jahera (1981) found consistent evidence of such expense preference behavior in the United States depository industries; Awh and Primeaux (1985) in the electrical utility industry; and Fields (1988) in the mutual life insurance companies.…”

Section: Introductionmentioning

confidence: 73%

Organizational Form and Expense Preference: Spanish Experience

Hasan

Lozano‐Vivas

2002

Bulletin of Econ Res

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“…Empirical studies on the risk-taking behavior of credit unions and mutuals confirm that they engage in lower risk-taking behavior than stockholding companies (Esty, 1997;Cordell, MacDonald, and Wohar, 1993;Lamm-Tennant and Starks, 1993;Saunders et al, 1990;Verbrugge and Goldstein, 1981). Karels and McClatchey (1998) even find that the introduction of deposit insurance for US credit unions did not lead to higher risk taking but, on the contrary, increased their capitalization.…”

Section: Empirical Researchmentioning

confidence: 96%

Market discipline across bank governance models: Empirical evidence from German depositors

Arnold

Größl

Koziol

2016

The Quarterly Review of Economics and Finance

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Risk Return, and Managerial Objectives: Some Evidence From the Savings and Loan Industry

Cited by 49 publications

References 29 publications

An examination of the relative economic efficiency of mutual vs. stock savings institutions

An examination of the relative economic efficiency of mutual vs. stock savings institutions

Organizational Form and Expense Preference: Spanish Experience

Market discipline across bank governance models: Empirical evidence from German depositors

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